Something I Don't Get About Swaptree

The model behind new startup Swaptree, which will launch later this summer, is to allow people to trade media – books, music, dvds and videogames – directly with other users. As Rafe Needleman notes, here are other services out there that offer this – for music and peerflix for dvds. But those sites are specific to music (Lala) or DVDs (peerflix), and both charge users a small fee per transaction.

Swaptree will be different. First of all, any media can be swapped for any other kind of media. So I can trade the book I just finished for a DVD, or whatever. And Swaptree isn’t charging transaction fees. The site will support itself from page views. Users are responsible for their own shipping charges, however.

Swaptree is making it as easy as possible to conduct trades. To trade an item, all you have to do is enter the UPC or ISBN code on the back of the media and Swaptree fills in the details. And once you find someone to trade with, Swaptree will allow you to print out postage and shipping information right on the site.

Swaptree presents a compelling case for trading on their site, too. They say all you have to do is enter the item you want to trade, and you’ll be presented with “thousands” of items you can receive in trade. Their algorithm will also set up trades with up to 4 people, increasing the likelihood that you’ll see something you like.

So all that’s great, but something doesn’t smell right to me at Swaptree. First of all, trying to make a living on pageviews and advertisements will be tough. Lala and Peerflix don’t seem to be generating enough page views to support a company on advertising. I can see how Swaptree could be much more popular than either of those sites, but it may not be enough. Mitigating this, however, is the fact that their customer base will be primed for high end advertising – these people will obviously be ready to click over to Amazon and buy something on the spot.

But that leads me to my second, greater concern. Entering in an item and being presented with thousands of swap choices sounds great. I’m sure I could find things that I’d like to trade. But just how is that demand curve for my item generated? It seems to me that at some point in the process, I’m going to be asked what I am willing to trade for that item (if no one does this, there’s no way to create a market). And if I have to decide what I want and wait for that item to come on the market (assuming, with a stretch, that the person will want what I have to offer), well, it’s probably easier to just sell it on eBay and pick up whatever it is I’m looking for while I’m there. So what I see happening is that lots of people may be willing to enter their stuff in for trades, I don’t think that many people will take the time to say what they want to trade it for.

Maybe this is just a long winded way of saying that money does serve quite a nice purpose in our society, and eBay seems to have perfected the swapping market using that long proven currency of trade.

Sign up for the Swaptree beta on their home page.